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STRATEGI MANAGEMENT

CASE STUDY: A!MART ST"RES

#RE#ARED $Y: AHMED HASSAN HADI %A&'&&(')&)*

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#RE#ARED +"R: DrTengk,

E-CUTI E SUMMARY

This report involves analysis of Wal-Mart Stores, and how it has changed over

the years. In the following report, a brief introduction and a brief background

will be given for the company and the report will then go on to take into

account various matri es that will help us identify which strategies need to

be adopted by Wal-Mart Stores.!urthermore,the vision and mission

statement for the company has also been identi"ed# in addition, the

ob$ectives and strategies have also been put forward. Moreover, as

mentioned already, matri es such as e ternal factor evaluation matri ,

internal factor evaluation matri , competitive pro"le matri , SW%Tmatri ,

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&'( matri , I) matri , S*+') matri and the (rand Strategy matri have all

been identi"ed. !inally, the report will e press alternate strategies for Wal-

Mart Stores and evaluate in order to "nd out which strategy is suitable for

Wal-Mart Stores in order to be e ective and success in the future.

&.' INTR"DUCTI"N

Wal-Mart Stores, Inc is an American public corporation that runs a chain of large discount

department stores and a chain of warehouse stores. In 2009 and 20 0 it was the world!s largest

public corporation b" re#enue, according to the $orbes %lobal. &he compan" was founded b"

Sam Walton in 9'2, incorporated on (ctober ) , 9'9, and publicl" traded on the *ew +or

Stoc change in 9/2. Wal-Mart, head uartered in 1enton#ille, Ar ansas, is the largest

ma orit" pri#ate emplo"er and the largest grocer" retailer in the 3nited States. In 2009, it

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generated 4 5 of its 3S6247 billion sales in the 3.S. from grocer" business. It also owns and

operates the Sam!s 8lub retail warehouses in *orth America. Wal-Mart has 7400 stores in 4

countries, with 44 different names.

&he compan" operates under its own name in the 3nited States, including the 40 states. It alsooperates under its own name in uerto :ico. Wal-Mart operates in Me ico as Walme , in the

3nited ;ingdom as Asda and <apan as Sei"u,. It has wholl"-owned operations in Argentina,

1ra=il, and 8anada. Wal-Mart!s in#estments outside *orth America ha#e had mi ed results> its

operations in the 3nited ;ingdom, South America and 8hina are highl" successful, while it was

forced to pull out of %erman" and South ;orea when #entures there were unsuccessful.

&.& $AC GR"UND

*o word better describes Wal-Mart than growth. In 9?4, Sam Walton opened his first 1en

$ran lin franchise in *ewport, Ar ansas. @i#ing in rural 1enton#ille, Ar ansas, at the time,

Walton, his wife elen, and his brother 1ud operated the nationBs most successful 1en $ran lin

franchises. CWe were a small chainD, said Walton of his ' store operation. C&hings were running

so smoothl" that we e#en had time for our families.D What more could a man wantE A great deal

as it turned out.

Sam and 1ud Walton could see that the #ariet" store was graduall" d"ing because supermar ets

and discounters were de#eloping. $ar from being secure, Walton new that he was under siege

and decided to counter attac . e first tried to con#ince the people in top management of 1en

$ran lin to enter discounting. After their refusal, Sam Walton made a uic trip around the

countr" in search of ideas. e then began opening his own discount stores in small Ar ansas

towns li e 1enton#ille and :ogers.

&he compan" opened its first discount department stores FWal-MartG in *o#ember 9'2. &he

earl" stores had bare tile floors and pipe rac s. Wal-Mart did not begin to re#amp its imagesignificantl" until the mid- 9/0s, and growth in the earl" "ears was slow. owe#er, once the

compan" went public in 9/0s, sales began to increase rapidl". When it initiall" went public, 00

shares of Wal-Mart stoc would ha#e cost 6 ,'40. *ow, those 00 shares are worth o#er

6'million.

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Such retailers as &arget, Henture, and ;mart pro#ided the e amples that Wal-Mart sought to

emulate in its growth. &he old Wal-Mart store colors, dar and white Ftoo harshG, were dumped

in fa#or of a three- tone combination of light beige, soft blue, and burnt orange. 8arpeting, which

had long been discarded on apparel sales floors, was put bac . *ew rac s were put into use that

displa"ed the entire garment instead of onl" an outer edge.

Sam Walton died in 992. 1ud Walton died in 994. Wal-MartBs 994 annual report was

dedicated to 1ud. Sam Walton once said about 1ud, C(f course, m" number-one retail partner

has been m" brother, 1ud. 1udBs wise counsel and guidance ept us from man" a mista e. (ften,

1ud would ad#ice ta ing a different direction or ma" be changing the timing. I soon learned to

listen to him because he has e ceptional udgment and a great deal of common sense.D

In 2000, . @ee Scott was named president and 8 ( of Wal-Mart. In $ebruar" 2009, Mi e u e became the new president and 8 ( when Scott retired from the position. According to du e,

Cour compan" is so well positioned for toda"Bs difficult econom" and tomorrowBs changing

world. We ha#e an e ceptionall" strong management team, able to e ecute our strateg", perform

e#er" single da", and deli#er results.D

&.) ISI"N STATEMENT

J romotion of ownership of ethical cultureJ

&.0 MISSI"N STATEMENT

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Wal-Mart does not officiall" ha#e a mission statement according to the case stud" but nowada"s

the" officiall" published this mission statement.

CWe sa#e people mone" so the" can li#e betterD.

&.1 THE C"M#ANY2S $USINESS STRATEGY

&he 1usiness strategies Wal-Mart uses and how the" differentiate their ser#icesKproducts. &here

are ) generic business strategies and the" consist of the $ocus strateg", the ifferentiation

strateg", and (#erall 8ost leadership

&.1.& +oc,s str3tegies

$ocus strateg" is usuall" defined as focusing on offering products and ser#ices to a particular

mar et segment or bu"er group, within a segment of a product line, andK or to a specific

geographic mar et.

&.1.4 T5e Di66erenti3tion str3teg7:

&he ifferentiation strateg" is defined as offering a product or ser#ice that is percei#ed as uni ue

in the mar etplace.

&.1.) "8er399 Cost 9e3 ers5ip:

Wal-MartBs strateg" is (#erall 8ost @eadership, offering their customers great ualit" ser#ice

and products at a lower price than their competition. (#erall 8ost @eadership is defined as

offering the same or better ualit" product or ser#ice at a price that is less than what an" of the

competition is able to do

&.; C"M#ETIT"RS

Wal-Mart!s primar" competition includes department stores li e ;mart, and &arget

8orporation. 8ompetitor of Wal-Mart!s Sam!s 8lub di#ision is 8ostco Wholesale.

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&.;.& T3rget Corpor3tion

&arget 8orporation, originall" the a"ton r" %oods 8ompan" and later the a"ton

udson 8orporation, is an American retailing compan", founded in 902 and head uartered in

Minneapolis, Minnesota. It is the second-largest discount retailer in the 3nited States, preceded b" Wal-Mart. &he compan" is ran ed at number )7 on the $ortune 400 as of 20 2 and is a

component of the Standard L oor!s 400 inde . Its bullBs e"e trademar is licensed to

Wesfarmers, owners of the separate &arget Australia chain which is unrelated to &arget

8orporation.

&he first &arget store was opened in 9'2 in nearb" :ose#ille, Minnesota. &arget grew and

e#entuall" became the largest di#ision of a"ton udson 8orporation, culminating in the

compan" being renamed as &arget 8orporation in August 2000. (n <anuar" ), 20 , &argetannounced its e pansion into 8anada. &arget 8anada will operate 00 to 40 stores b" 20 ),

through its purchase of leaseholds from the 8anadian chain ellers.

&.;.4 m3rt

;mar is an American chain of discount stores head uartered in the 3nited States. &he

chain purchased Sears in 2004, forming a new corporation under the name Sears oldings

8orporation. &he compan" was founded in 9'2 and is the third largest discount store chain in

the world, behind Wal-Mart and &arget, with stores in the 3nited States, uerto :ico, the 3.S.

Hirgin Islands, and %uam Fwhich houses the world!s largest ;martG. As of <anuar" 29, 20 ,

;mart operated a total of ,)0/ F' closing b" earl" 20 G ;mart stores across ?9 states, %uam,

uerto :ico, and the 3.S. Hirgin Islands. &his store count included ,2/7 discount stores,

a#eraging 9),000 s ft F7,'00 m2G, and 29 Super 8enters, a#eraging '9,000 s ft F 4,/00 mG.

;mart became nown for its J1lue @ight Specials.J &he" occurred at surprise moments when a

store wor er would light up a mobile police light and offer a discount in a specific department of

the store. At the height of ;mart!s popularit", the phrase Jattention ;mart shoppersJ also entered

into the American pop ps"che, appearing in films and other media such as &roop 1e#erl" ills,

Si a"s Se#en *ights, :ain Man, 1eetle uice, and awn of the ead.

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;mart!s world head uarters was located in &ro", Michigan, but since the purchase of Sears, has

been relocated to offman states, Illinois. ;mart also e ists in Australia and *ew ealand Fsee

;mart AustraliaG, although it now has no relation to the American stores e cept in name, after

3.S. e uit" in the Australian business was purchased in the late 9/0s.

&.;.) Costco 5o9es39e

8ostco Wholesale 8orporation is a membership-onl" warehouse club that pro#ides a

wide selection of merchandise. As of <ul" 20 2, it is the second largest retailer in the 3nited

States, the se#enth largest retailer in the world and the largest membership warehouse club chain

in the 3nited States.

8ostco is head uartered in Issa uah, Washington , 3nited States N and was founded in 9/' in San

iego ,8A with its first warehouse in Seattle . &oda" 8ostco has a total of '2' locations in the

3; F2)G, Australia F)G, 8anada F74G, Me ico F))G, &aiwan F9G,South ;orea F9G,<apan F 4G, and

the 3nited States F??9G.

4.' +INANCIA! RATI" ANA!YSIS

!inancial ratios are computed from an organi ation s income statement

and balance sheet. 'omputing "nancial ratios is like taking a picture because

the results re/ect a situation at $ust one point in time. 'omparing ratios over

time and to industry average is more likely to result in meaningful statistics

that can be used to identify and evaluate strengths and weaknesses. ;e"

financial ratios can be classified into the following fi#e t"pes>

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http://en.wikipedia.org/wiki/Issaquah,_Washington


http://en.wikipedia.org/wiki/Costco#cite_note-4

http://en.wikipedia.org/wiki/San_Diego


http://en.wikipedia.org/wiki/California


http://en.wikipedia.org/wiki/Seattle

http://en.wikipedia.org/wiki/Australia


http://en.wikipedia.org/wiki/Canada


http://en.wikipedia.org/wiki/Mexico


http://en.wikipedia.org/wiki/Taiwan

http://en.wikipedia.org/wiki/South_Korea

http://en.wikipedia.org/wiki/Japan


http://en.wikipedia.org/wiki/United_States


http://en.wikipedia.org/wiki/Costco#cite_note-4




http://en.wikipedia.org/wiki/Seattle




http://en.wikipedia.org/wiki/Taiwan

http://en.wikipedia.org/wiki/South_Korea


http://en.wikipedia.org/wiki/United_States



4.& !I<UIDITY RATI"S

0i1uidity ratios measure a "rm s ability to meet maturing short-term

obligations. 0i1uidity ratios consist of two parts one is called current ratio

and the one is called 1uick or acid-test ratio.

Ratio Formula 2008 2009'urrent 2atio 'urrent assets 3

current liabilities

456763 85495

: 6.57

45;4;3 88<;6

: 6.55

!rom the above calculation we can conclude that the company capability for

every = > of current liability, the company ability = 6.57 of its current assetswhich means the company is recommended to increase its current ratio in

the "scal year 7665 . ?owever, in year 766; the above calculation indicated

that the company capability for every = > of current liability, the company

ability = 6.55 of its current assets which means the company is

recommended to increase its current ratio.

Ratio Formula 2008 2009@uick 2atio 'urrent assets

-inventory 3

current liabilities

45676-<8>8;385495: 6.77

45;4;-<48>>388<;6: 6.7A

&ased on the above table, the 1uick ratio in 7665 implies that the company

might have overstocking problem because the 1uick ratio is less than one

and also less than the current ratio. Whereas, in 766;, there is a slightly

di erence between 1uick ratio of the company in 7665 and 766;. Meaning

that, the company might have overstocking problem because the 1uick ratio

is less than one and also less than the current ratio.

2.2 LEVERAGE RA !"#

0everage ratios measure the e tent to which a "rm has been "nanced

by debt. Such as debt-to total-assets ratio, debt-to-e1uity ratio, long-term

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debt-to-e1uity ratio, long-term debt-to-e1uity ratio, and time-interest-earned

Bor coverageC ratio.

Ratio Formula 2008 2009

Debt-to-Total-+ssets 2atio

Total debt 3 Totalassets

7;9;;E <A6<3>A<8>4: 6.76

<><4;E <7663>A<47;: 6.7>

The above ratio for the year 7665 and the year 766; indicates that the

company is con"dence to gain the trust from its creditors because the debt

ratio is low.

Ratio Formula 2008 2009Debt-to-)1uity

2atio

Total debt3 Total

stockholder s

)1uity

7;9;;E <A6<3A4A65: 6.87

<><4;E <7663A8758: 6.8<

2egarding to the above the table it is clear to said that the company uses

less borrowing as the source of "nancing. When the company use less

borrowing it is implied that the company is well dependable to creates its

"nancing to operate its business by its own resources.

Ratio Formula 2008 20090ong-term debt-

in )1uity 2atio

0ong-term Debt 3

Total

stockholders

)1uity

7;9;;3 A4A65: 6.4A

<><4; 3 A8758: 6.45

The above ratio stated that the company relies on its stockholders e1uity

rather than long term debt. In this sense the company prefer to ignoring to

take long term debt when its stockholders ful"lls its needs meaning that the

company use its own sources of "nancing in the eFcient way.

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Ratio Formula 2008 2009 Time-interest-

earned

*ro"ts before

interest andta es B *&ITC3

Total interest

charges

76>8; 3 >9;4

: >>.7<

765;5 3 >;66

: >>

&ased in the above calculation of the time interest earned it can be said that

Wal-Mart have good ability to ful"lls interest obligations. &ecause the time

interest earned measure the "rm s ability to cover its interest charges out of

its operating pro"ts. &ased on this concept the higher the ratio the higher is

the "rm s ability to ful"ll interest obligations.

Ratio Formula 2008 2009 Time-interest-

earned

*ro"ts before

interest and

ta es B *&ITC3

Total interest

charges

76>8; 3 >9;4

: >>.7<

765;5 3 >;66

: >>

2.3 A$ !V! % RA !"#

+ctivity ratios measure how e ectively a "rm is using its resources. +ctivity

ratios involve inventory turnover, " ed assets turnover, total assets turnover,

accounts receivable turnover, and the average collection period.

Ratio Formula 2008 2009Inventory

turnover

Sales 3 Inventory

of "nished goods

<94<69 3 <8>8;

: >6.A8

46>744 3 <48>>

: >>.A<

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The above ratio determines that B<A63>>.A<C takes around <> days to turn its

stock into sales. In other words there is a slightly improvement in regards of

inventory turnover than 7665. This ratio determines that B<A63>6.A8C takes

around <4 days to turn its stock into sales.

Ratio Formula 2008 2009!i ed +ssets

Turnover

Sales 3 !i ed

+ssets

<94<69 3 ;<978

: <.;;

46> 744 3 ;758A

: 4.<7

The above ratio indicates that the utili ation of the company s " ed assets is

appro imately 4 times of its sales. The above ratio indicates that the

utili ation of the company s " ed assets is more than 4 times of its sales.

Ratio Formula 2008 2009 Total +ssets

Turnover

Sales 3 Total

+ssets

<94<69 3 >A<8>4

: 7.7;

46>744 3 >A<47;

: 7.4A

The above "gure determines that the company total assets turnover is more

than 7 of utili ation of its total assets. The company is recommended to

increase its total assets turnover. This "gure determines that the company

total assets turnover is more than 7 of utili ation of its total assets. The

company is recommended to increase its total assets turnover.

Ratio Formula 2008 2009+ccounts

receivable

Turnover

+nnual credit

Sales 3 +ccounts

2eceivable

<94<69 3 <A47

: >67.95

46>744 3 <;68

: >67.98

%n the above table, the company account receivable turnover is >67, which

e press that the company is recommended to reduce this ratio and improve

it to collect its debts from its customers from shorter time rather than collect

its debts from its customer on >67 days.

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Ratio Formula 2008 2009+verage

collection period

+ccounts

receivable 3 Totalcredit sales 3 <A8

days

<A47 3 <94<693

<A8 days <.Adays

<;68 3 46>7443

<A8 days <.Adays

&ased on the above table , we can say that the company has a very good

average collection period which is only around <.A days only and it is highly

eFcient that the Wal-Mart stores collect its money from its account

receivable or its customers in a short time of period which means that the

company absolutely doing well.

2.4 PR"FA !&!L! % RA !"#

*ro"tability ratios measure management s overall e ectiveness as shown by

the returns generated on sales and investment. *ro"tability ratios include the

followingG (ross pro"t margin, %perating pro"t margin, Het pro"t margin,

2eturn on total assets B2%+C, 2eturn on stockholders e1uity B2%)C, )arnings

per share B)*SC, and *rice-earnings ratio.

Ratio Formula 2008 2009(ross pro"tmargin

Sales- cost ofgoods sold 3 Sales

<94<69- 75A<86 3<94<69: 6.7< >66:7<J

46>744- <6A>85 346>744: 6.74 >66:74J

!rom the above illustration we can conclude that the ratio of the gross pro"t

margin in 766; indicated that how much the company has gained for every =

> sale made. !rom this ratio the company shows the eFciency of the

company in controlling its costs of goods sold. + Wal-Mart store is a pro"table

company.

Ratio Formula 2008 2009%perating pro"tmargin

)arnings beforeinterest and

7>;87 3 <94<69: 6.6<4

><466 3 46>744: 6.6<<

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ta es B )&ITC3Sales

>66:<.4 J >66:<.< J

2egarding to the above table Wal-Mart stores have gotten a very low

operating pro"t margin because the industry average for operating pro"t

margin suppose to be >9J . !rom the above calculation it is clear the gap is

big between the average industry and Wal-Mart stores. So that, Wal-Mart is

recommended to increase its operating pro"t margin. Since the operating

pro"t margin is derived after deducting all cost and e penses perhaps the

company has to look which kind of e penses can be eliminated.

Ratio Formula 2008 2009*rice earningsratio

Market price pershare 3 earningsper share

6.>6 3 >.A>: 6.6A

6.>6 3 >.96: 6.6A

&ased on the above mentioned, the price earnings ratio is the tool that used

on the "nancial ratio that show how much investors are willing to pay the

company s shares. This ratio measures the con"dence in the "rm s future

prospective. &ased on the above ratio for Wal-Mart stores for the two

e ecutives years 7665 and 766; the company price earnings ratio cannotmotivate the investors to buy Wal-Mart shares because the earning is very

low and it does not show the con"dence of the investors.

2.5 GR"' ( RA !"#

(rowth ratios measure the "rm s ability to maintain its economic position inthe growth of economy and industry. (rowth ratio involves the followingfunctionsG Sales, Het income, )arnings per share and Dividends per share.

Ratio Formula 2008 2009Sales +nnual

percentagegrowth in totalsales

<94<69- <4498; 3<4498;: 6.65A >66:5.AJ

46>744- <94<69 3 <94<69: 6.697

>66:9.7J

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The above table e presses the growth in total sales for Wal-Mart 'ompany in

two consecutive years. ?owever in 766; Wal-Mart has slightly little bit

di erence than 766;. %n the overall the company has gotten a good salesratio in the both years. +s well as, the company has to improve its ratio in

the ne t coming years.

Ratio Formula 2008 2009Het income +nnual

percentage

growth

>79<>->>754 3>>754

: 6.64 >66 :4J

><466- >79<> 3>79<>

:6.68 >66J:8J

The above net income ratio is measuring the "rm s growth rate in pro"ts. In

regards of net income for Wal-Mart 'ompany, the "gures above indicted that

the company got a good net income in the two consecutive years.

2atio !ormula 7665 766;)arnings pershare

+nnualpercentagegrowth in )*S

>.A> K >.4< 3 >.4<: 6.><

>.96- >.A> 3 >.A>: 6.6A

The above )arnings per share is one of the most widely ratios concerning

common stock. +s we can see from the above "gure there was a decreasing

for the earning per share for Wal-Mart stores which implies that Wal-Mart

should look what is the reason for the earning per share to be decreased in766; and the company have to improve its earnings per share because a

higher value indicates a higher pro"ts per share . Since Wal-Mart company is

pro"t oriented so it must concerned about this aspect.

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).' INTERNA! +ACT"R E A!UATI"N MATRI- %I+E*

I$ Matri is a strategic management tool for auditing or e#aluating ma or strengths and

wea nesses in functional areas of a business.

Strengt5s:

. Wal-Mart focuses on low cost, best #alue, greatest selection of ualit" merchandise and

highest standards of customer ser#ice. Fpage. 2?2, paragraph ), line , 2, and )G.2. Wal-Mart operated internationall" in ) countries and uerto rico, with /'2 discount

stores and ?)' supercenters. F age 2)7, paragraph /, line 9 and 0G.). Wal-Mart has one the worldBs largest pri#ate satellite communication s"stems, which

enables it to control distribution. F age 2?2, paragraph ', line 9 and 0G?. Wal-MartBs sales rose from 6)/?.) billion in fiscal "ear 2007 to 6?0 .2 billion in 2009

while net income rose from 6 2./ billion to 6 ).? billion. F age 2)), paragraph ), line 2

and )G.

e3knesses:

. Wal-Mart does not ha#e a formal mission statement. F age 2)), paragraph 4, line G.2. Although these stores represent Wal-MartBs heritage, the" had become lost in the shuffle

as the compan" opened 20,000 to 40,000 s uare- foot stores. F age 2)7, paragraph 7,

line ' and /G.

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). &he compan" a#oids spending mone" on consultants and mar eting e perts.Fpage 2?'.

aragraph 2, line ) and ?G?. Sam!s clubs were ne#er designed to sell merchandise categories, but rather items. F age

2? , paragraph ), line and 2G.

INTERNA! +ACT"R E A!UATI"N MATRI- %I+E*

e7 Intern39 63ctors eig5t R3ting eig5te Score

StrengthWal-Mart focuses on low cost, best #alue,

greatest selection of ualit" merchandise

and highest standards of customer ser#ice.

Fpage. )02, paragraph ), line 2, ) and ?G.

Wal-Mart operated internationall" in )

countries and uerto rico, with /'2

discount stores and ?)' supercenters.

F age 297, paragraph /, line 9 and 0G.

Wal-Mart has one the worldBs

largestpri#ate satellite communication

s"stems, which enables it to control

distribution. F ageWal-MartBs sales rose from 6)/?.) billion

in fiscal "ear 2007 to 6?0 .2 billion in

2009 while net income rose from 6 2./

billion to 6 ).? billion. F age 29),

0.20

0.09

0. 4

0. 0

?

)

?

)

0.70

0.2/

0.'0

0.)0

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paragraph ), line 2 and )G.

WeaknessesWal-Mart does not ha#e a formal mission

statement. F age 29), paragraph 4, line G.Although these stores represent Wal-MartBs

heritage, the" had become lost in the

shuffle as the compan" opened 20,000 to

40,000 s uare- foot stores. F age 297,

paragraph 7, line ' and /G.&he compan" a#oids spending mone" on

consultants and mar eting e perts.Sam's clubs were never designed to

sell merchandise categories, but rather

items. (page301, paragraph 3, line 1

and 2).

0.0/

0. '

0. )

0. 0

2

2

0. ?

0. '

0. )

0.20

Tot39 1 2.60

After conducted the calculation for the internal anal"sis, the total weighted score is 2.'0 which

means the compan" has good internal strength and wea ness because it is abo#e the ideal #alue.

0.'E-TERNA! +ACT"R E A!UATI"N MATRI- %E+E*

$ matri is a strategic-management tool often used for assessment of current business

conditions. &he $ matri is a good tool to #isuali=e and prioriti=e the opportunities and threats

that a business is facing.

"pport,nit7:

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. Wal-MartBs communit" in#ol#ement "ear after "ear is phenomenal. According to the

chronicle of philanthrop", the Wal-Mart foundation is the largest corporate cash

contributor in America. F age 2?'4, paragraph 4, line , 2, and )G.2. Wal-Mart maintains a strategic competiti#e focus on global positioning. F age2?2,

paragraph ), line G.). Wal-Mart is in the retail business, which also includes Internet -tailing Fpage 2?),

paragraph , line G

T5re3ts:

. *ationall" and internationall", Wal-Mart has been faced with the 3nited $ood and

8ommercial wor ers 3nion, tr"ing to persuade emplo"ees to become part of the union

F age 2?2, paragraph 4, line and 2G.2. &arget has now become a fierce competitor of Wal-Mart and is ran ed second among

discount retailers with sales of nearl" 6'4 billion with )'',000 emplo"ees. Fpage 2?',

paragraph ?, line and 2G). Most recent comparisons show that while the SamBs club di#ision of Wal-Mart brought in

o#er 6??billion in net sales while 8ostco finished the "ear at ust o#er 6/2 billion.F2?',

paragraph ', line ? and 4G

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1.' E-TERNA! +ACT"R E A!UATI"N MATRI- %E+E*

e7 e=tern39 63ctors eig5t R3ting eig5te Score

Opportunity

Wal-MartBs communit" in#ol#ement "ear

after "ear is phenomenal. According to the

chronicle of philanthrop", the Wal-Mart

foundation is the largest corporate cash

contributor in America. F age )04,

paragraph 4, line , 2, and )G.Wal-Mart maintains a strategic competiti#e

focus on global positioning. F age )02,

paragraph ), line G.Wal-Mart is in the retail business, which

also includes Internet -tailing Fpage )0),

paragraph 2, line G.

0.22

0.2

0. /

?

?

)

0.77

0.7?

0.4

Threats

Page | 20



*ationall" and internationall", Wal-Mart

has been faced with the 3nited $ood and

8ommercial wor ers 3nion, tr"ing to

persuade emplo"ees to become part of the

union F age )02, paragraph 4, line and

2G.&arget has now become a fierce competitor

of Wal-Mart and is ran ed second among

discount retailers with sales of nearl" 6'4

billion with )'',000 emplo"ees.

Most recent comparisons show that while

the SamBs club di#ision of Wal-Mart

brought in o#er 6??billion in net sales

while 8ostco finished the "ear at ust o#er

6/2 billion.

0. 7

0. )

0.09

)

2

0.4?

0.2'

0.09

Tot39 1 3.12

According to the abo#e anal"sis we can conclude that the compan" is #er" good because the total

weight score is higher than 2.40. &he total score is ). 2 that mean the compan" can o#ercome itsthreats and can come across its opportunities.

Page | 21



;.' C"M#ETITI E #R"+I!E MATRI- %C#M*

'al)*art >$o+t,o'-ole+ale 2

< arget 4

Critic39 s,ccess63ctors

eig5t Ratig

+,ore Ratig

#,ore Rati g #,ore

$inancial position 6.<6 < 6.;6 7 6.A6 < 6.;6

rice competiti#eness 6.78 4 >.66 < 6.98 4 >.66Ad#ertisement 6.76 < 6.A6 7 6.46 < 6.A6%lobal e pansion 6.78 < 6.98 7 6.86 > 6.78Tot39 &.'' ).41 4.41 4.>1

>httpG33en.wikipedia.org3wiki3'ostco

7httpG33www.managementparadise.com3forums3marketing-management376;777-marketing-strategy-costco.html

<httpG33media.corporate-ir.net3mediaL"les3irol3A83A85753+*L?i.pdf

4httpG33en.wikipedia.org3wiki3TargetL'orporation

Page | 22

http://en.wikipedia.org/wiki/Costco

http://www.managementparadise.com/forums/marketing-management/209222-marketing-strategy-costco.html


http://media.corporate-ir.net/media_files/irol/65/65828/AP_Hi.pdf

http://en.wikipedia.org/wiki/Target_Corporation

http://en.wikipedia.org/wiki/Costco



http://media.corporate-ir.net/media_files/irol/65/65828/AP_Hi.pdf

http://en.wikipedia.org/wiki/Target_Corporation



The competitive pro"le matri for Wal-Mart Stores classi"es the company s

top competitors such as 'ostco Wholesale and Target. 'ompanies are then

evaluated on the basis of signi"cant success factors. +nd the success factors

are weighed from B6.6, not important to >.6 very importantC and the ratings

pass on to the strengths and weaknesses by 4being the ma$or strength, to

> for ma$or weaknesses. +ccording to the '*M table Wal-Mart Stores is the

highest top performer with value of <.78. Meanwhile, Target 'orporation is

the second top performer with value of 7.98 and 'ostco is third performer

with value of 7.78.

>.' S "T MATRI- ANA!YSIS

SW(& Matri Is a s"stematic approach used to identif" strengths, wea nesses, opportunities and

threats FSW(&G to assist the strategic planning process.

Page | 23



STRENGTHS

G. Wal-Mart focuses on low cost, best

#alue, greatest selection of ualit"

merchandise and highest standards of

customer ser#ice.

2G.Wal-Mart operated internationall"

in ) countries and uerto rico, with

/'2 discount stores and ?)'

supercenters.

)G. Wal-Mart has one the worldBs

largest pri#ate satellite communication

s"stems, which enables it to controldistribution.

?G. Wal-MartBs sales rose from 6)/?.)

billion in fiscal "ear 2007 to 6?0 .2

billion in 2009 while net income rose

from 6 2./ billion to 6 ).? billion.

EA NESSES

. Wal-Mart does n

formal mission sta2. Although thes

represent

heritage, the" ha

lost in the shuf

compan" opened

40,000 s uare- f). &he compan"

spending mo

consultants and

e perts.?. Sam's clubs wer

designed to

merchandise ca

but rather items.

"##"RTUNITIES

Wal-MartBs communit"

in#ol#ement "ear after "ear

is phenomenal. According

to the chronicle of

philanthrop", the Wal-Mart

foundation is the largest

corporate cash contributor

in America.Wal-Mart maintains a

strategic competiti#e focus

on global positioning.Wal-Mart is in the retail

business, which also

S" STRATEGIES

G. Maintain low cost leadership toimpro#e strategic competiti#eness and

business -tailing.%S&? '4? ')* #ro ,ct e8e9opment

2G. e#elop business -tailing b"

getting the benefit of pri#ate satellite

communication in order to maintain

strategic competi#eness.

" STRATEGIES

G. Spending more

consultants and mar eting

order to impro#e business

and to gain

competiti#eness.

% )? '4? ')*

M3rket #enetr3tion str3t

Page | 24



includes Internet -tailing %S)? '4? ')*

#ro ,ct e8e9opment str3teg7

THREATS

*ationall" and

internationall", Wal-Mart

has been faced with the

3nited $ood and

8ommercial wor ers

3nion, tr"ing to persuade

emplo"ees to become part

of the union&arget has now become a

fierce competitor of Wal-

Mart and is ran ed second

among discount retailers

with sales of nearl" 6'4

billion with )'',000

emplo"ees.

Most recent comparisonsshow that while the SamBsclub di#ision of Wal-Mart

brought in o#er 6??billionin net sales while 8ostcofinished the "ear at usto#er 6/2 billion.

ST STRATEGIES

G. Increase salar" both nationall" and

internationall" for the emplo"ees in

order to pre#ent united food and

commercial wor ers union.

%S)? T&*

%Hori@ont39 Integr3tion*

T STRATEGIES

G. 8reate formal missio

to increase net sales.

&? T)*

%M3rket #enetr3tio

2G. Add merchandise

compete effecti#el" with

order to increase mar et sh% 0? T4*

%M3rket penetr3tio

.' STRATEGIC #"SITI"N AND ACTI"N E A!UATI"N %S#ACE* MATRI-

&he S A8 matri e#aluates different #ariables and assigns them a score considering how

important the" are for the situation of the compan". It anal"=es four different areas Ftwo internal

to the compan" and two e ternalG that will represent four uadrants in a graphic. &he purpose of

this matri is to situate the compan" in one of these four uadrants and gi#e a suggestion.

Page | 25



+in3nci39 #osition %+#* St3Bi9it7 #osition %S#*

. @i uidit"2. operating income). In#entor" turno#er ratio?. Wor ing capital

Tot39

A8er3ge

)

&

1O2

&&

4.>1

. 8ompetiti#e pressure2. 1arriers to entr" into mar et). ase of e it from mar et?. &echnological changes

Tot39

A8er3ge

&

)

)

4

(

4.41

Competiti8e #osition %C#* In ,str7 #osition %I#*

. Mar et share2. product Pualit"). &echnological S ill?. 8ustomer lo"alt"

Tot39

A8er3ge

4

)

&

0

&'

4.1

. %rowth otential2. rofit potential). $inancial Stabilit"?. ase of entr" into mar et

Tot39

A8er3ge

O'

O4

O'

O/

O2?

O'

$al,ulatio /

!P $P 6 )2.5 3.5

% FP $P 2.75 )2.5 0.5

FP

Page | 26



$" #ERVA !VE 7 AGGRE##!VE

6

5

4 3 3.5 0.5

2

1

)8 )7 )6 )5 )4 )3 )2 )1 1 2 3 4 5 6 7 8 9

)1

)2

)3

)4

)5

)6

EFE #!VE)7 $"*PE ! !VE

)8

#P

+ccording to the above graph we can see that the company have aggressive

stretagy which contains backward, forward, hori ental integration, market

penetration, market development, product development and diversi"cationBrelated3 unrelatedC.

9.0 &"# " $" # L ! G GR" P &#G *A R!

The &'( matri , invented by the &oston 'onsulting (roup, is a tool that

allows to classify and evaluate the products and services of a business. It is

Page | 27

C# I#



a decision making tool in order to balance the activities of a company

among those which make pro"ts, those who ensure growth, those which

constitute the future of the "rm or those who are its heritage. The &'(

matri is divided into four types of circumstances and they are the stars,

cash, cows, dogs and 1uestions marks.

$om a : #ale+ i 2009 #ale+ i 2008Wal-Mart 46>,744 <94,<69'ostco A;,55; 96,;99

Target A8,<89 A4,;45

Relati;e *ar<et #-are

Wal-Mart sales in 766; : 46>,744

Target sales in 766; : A8,<89

Market share : A8,<89346>,744

: 6.>A

$om a : #ale+ i

2009

#ale+ i

2008

$al,ulatio A;erage

Gro=t-Rate

Wal-Mart 46>,744 <94,<69 46>,744 -

<94,<69 ><94,<69:

9.7J

'ostco A;,55; 96,;99 A;,55; K 96;99396;99

:

B>.8JC

Target A8,<89 A4,;45 A8,<89-A4,;453 A4,;45

:

6.A<

otal 6.33

! ?u+tr: Gro=t- 6.33>3 2.11@

Relati;e mar<et +-are

Page | 28



(ig- *e?um

Lo=

1 0.50

0.16 0.0

(ig- 20

2.11

*e?uim 0

Lo= ) 20

In the above &'( Matri e press the relative market share and the industry

growth rate of Wal-Mart. The relative market share of Wal-Mart is 6.>AJ

while the industry growth rate of 7.>>J and the position lies in the "rst cell

N1uestion markO which represents the strategies of market penetration,

market development, product developmet and divestiture. 0ast but not least,

the company has low relative market share but high industry growth rate.

10.0 ! ER AL) E ER AL !E *A R!

Page | 29

In ,str7

Growt5# AR# E# !" *ARB

$A#( $"'# "G#



The Internal e ternal BI)C Matri is a strategic management tool used to

analy e working conditions and strategic position of a business. The Internal

) ternal Matri or short I) matri is based on an analysis of internal and

e ternal business factors which are combined into one suggestive model.The

I) matri is based on the following two criteriaG Score from the )!) matri

-this score is plotted on the y-a is, and Score from the I!) matri -- plotted

on the -a is.

(E !FE " AL 'E!G( E #$"RE#

#tro g A;erage 'ea<

3.0 to 4.0 2.0 to 2.99 1.0to 1.994.0 3.0 2.0 1.0

3.0

2.0

1.0

1. !FE otal =eig-te? +,ore/ 2.602. EFE otal =eig-te? +,ore/ 3.12

Page | 30

4.;'

Grow 3nB,i9

E+E T"TA!EIGHTEDSC"RE ).&

!

!!

!!!

!V V V1

V!! V!!! !



+s mentioned in the above diagram, the total I!) weighted score of 7.A6falls

in P a is and the Total )!) weighted score of <.>7 falls in the Q a is.

+ccording to the I) matri below, Wal-Mart stores falls in the second cell andso as they should follow the strategy of grow and build. This strategy

containsbackward, forward, hori ental integration, market penetration,

market development, product development

11.0 GRA # RA EG% *A R!

The grand strategy is a useful tool for creating di erent and alternative

strategies for an organi ation. (rand matri has four 1uadrants# each

1uadrant contains di erent sets of strategies and the entire "rms along with

their respective divisions must fall in one of the 1uadrant. This matri has

two dimentions competitive position and market growth. The following

daigram is walmart s grand strategy matri .

Page | 31

ua?ra t !! ua?ra t !

ua?ra t !!! ua?ra t !V

RAP! *ARBE

# R" G

$"*PE !!VE



+ccording to the (rand Strategy Matri , the position of Wal-Mart Stores lies

in the "rst 1uadrant which reveals that the company has a strong

competitive position among the competitive market and very rapid market

growth as the annual growth in sales e ceeds above 8J.!urthermore, the

strategies recommended are market development, market penetration,

product development, forward integration, backward integration, hori ontal

integration, and related diversi"cation.

&4.' THE <UANTITATI E STRATEGIC #!ANNING MATRI- %<S#M*

The 1uantitive strategic planning matri is a strategic tool that allows

strategists to evaluate an alternative strategies ob$ectivly, based on

previously identi"ed e ternal and internal critical success factors.

(E PREV!" # # RA EG!E# ! #'" *A R!

#" #trategie+/

. Maintain low cost leadership to impro#e strategic competiti#eness and business -tailing.2. e#elop business -tailing b" getting the benefit of pri#ate satellite communication in

order to maintain strategic competi#eness.

'" #trategie+/

1. Spending more mone" on consultants and mar eting e perts in order to impro#e business

- tailing and to gain strategic competiti#eness.

# #trategie+/

1. Increase salar" both nationall" and internationall" for the emplo"ees in order to pre#ent

united food and commercial wor ers union.

' #tragie+/

Page | 32

S!" MAR ET

GR" TH



. 8reate formal mission statement to increase net sales.2. pand the merchandise categor" in the mar et to compete effecti#el" with &arget in

order to increase mar et share.

*at,-i g t-e e= alter ati;e +trateg:

>. Maintain lowcost leadership and spend more money to marketing

e perts in order to increase net sales Bproduct developmentC.2. addmerchandise categor" to compete effecti#el" with &arget in order to increase mar et

share.FMar et enetrationG

T5e ,3ntit3ti8e str3tegic p93nning m3tri= % spm*:

Maintain lowcost

leadership and

spend more

money to

marketing

e perts in order

to increase netsales.Bproduct

developmentC

Addmerchandise categor" in th

storesto compete effecti#el" wi

&arget in order to incre

mar et share.

FMar et enetrationG

Strengt5s eig5t AS TAS AS TAS

0.20 ? 0.70 ) 0.'0

0.09 2 0. 7 ) 0.2/

Page | 33



0. 4 -- --- -- --

>. Wal-MartBs sales rose from

6)/?.) billion in fiscal "ear

2007 to 6?0 .2 billion in 2009

while net income rose from

6 2./ billion to 6 ).? billion.

0. 0 ? 0.?0 ) 0.)0

e3kness

. Wal-Mart does not ha#e a

formal mission statement.0.0/ ) 0.2 0.0/

2. Although these stores represent

Wal-MartBs heritage, the" had

become lost in the shuffle as

the compan" opened 20,000

to 40,000 s uare- foot stores.

0. ' ---- ----- ----- -----

). &he compan" a#oids spending

mone" on consultants and

mar eting e perts.

0. ) ? 0.42 ) 0.)9

4. Sam!s clubs were ne#er designed to sell merchandisecategories, but rather items.

0.10 2 0.20 ? 0.?0

T"TA! &.''

"pport,nities

. Wal-MartBs communit"

in#ol#ement "ear after "ear is0.22 2 0.?? 0.22

Page | 34



phenomenal. According to the

chronicle of philanthrop", the

Wal-Mart foundation is the

largest corporate cash

contributor in America.

2. Wal-Mart maintains a strategic

competiti#e focus on global

positioning.

0.2 2 0.?2 ) 0.')

<. Wal-Mart is in the retail

business, which also includesInternet -tailing

0. / ) 0.4 2 0.)?

T5re3t

. *ationall" and internationall",

Wal-Mart has been faced with

the 3nited $ood and

8ommercial wor ers 3nion,

tr"ing to persuade emplo"ees

to become part of the union.

0. 7 ------- ------- -------- -------

2. &arget has now become

a fierce competitor of

Wal-Mart and is ran ed

second among discount

retailers with sales of

nearl" 6'4 billion with

)'',000 emplo"ees

0. ) ? 0.42 ) 0.)9

Most recent comparisons show

that while the SamBs club

di#ision of Wal-Mart brought

0.09 2 0. 7 ) 0.2/

Page | 35



in o#er 6??billion in net sales

while 8ostco finished the "ear

at ust o#er 6/2 billion.

Tot39 &.''0.) ).

According to the abo#e table, the total attracti#e score of PS M of Wal-Mart stores, the first

strateg", Maintain lowcost leadership and spend more money to marketing

e perts in order to increase net sales.Bproduct developmentC e press that

4.<5. whese as the second strategy which is Addmerchandise categor" in the stores

to compete effecti#el" with &arget in order to increase mar et share. FMar et enetrationG ha#e

).77 total attracti#e score. So we can conclude that the first strateg" has been chosen as the beststrateg" for Wal-Mart Stores to o#ercome its problems and succeed in the industr".

$" $L #!"

Page | 36



In conclusion , Wal-Mart is consieded as the largest retaliers company over

the world. In regards of its "nancial ratio , the company has gain a good ratio

which e perss how the stronger the company is. !urthemore, in the internal

factors, the company has many strengthes comparing to its weaknesses. +nd

its net sales increasing year by year both domestically and internationally. In

addition, Wal-Mart s e ternal factors, according to its opportuninites Wal-Mart

foundation is the largest corporate cash contibutor in +merica and it is

community involvement is phonomenal compare to its threats is Rnited food

and commercial workers union trying to persuade emplyees to become part

of the unoin .

%n the other hand, Wal-Mart s competitive pro"le matri B'*MC one of itsma$orest competitors are Target corporation, mart, and 'ostco Whole Sales.

+ccording to the '*M matri Wal-Mart is the top performed compare to its

competotors .

In addition, Wal-Mart s Space Matri its strategy aggressive stretagy which

contains backward, forward, hori ental integration, market penetration,

market development, product development and diversi"cation Brelated3

unrelatedC.Meanwhile , Wal-Mart s grand matri lies in the "rst 1uadrantwhich means the company has an e cellent strategy position and also tells

that the company has a strong competitive position among the competitive

market and very rapid market growth as the annual growth in sales e ceeds

above 8J.

+ccording to the I) matri , Wal-Mart stores falls in the second cell and so as

they should follow the strategy of grow and build. This strategy contains

backward, forward, hori ental integration, market penetration, marketdevelopment. Meanwhile the &'( Matri of Wal-Mart Stores lies in the

@uestion mark which means low relative market share but high industry

growth rate.

Page | 37



0astly. Wal-Mart inoder to move forward, we recommended that Wal-mart

uses product development strategy which comes out from the @S*M matri .

+ll in all in order to move forward Wal-Mart should apply this solid strategy in

order to beat its competitors and increase its market share.

walmart case 150

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